SKKY 10-K & 10-Q changes, risk factors and insider trading

Skkynet is an evolution of Cogent, an established financial and industrial middleware software vendor. Cogent’s specialization has focused on providing connectivity and data acquisition to a wide variety of industrial and office hardware and software products,products and then making that data available over a network using industry-standard protocols. The architecture of Cogent’s software naturally suits it for use both as a data aggregation platform at the process level, and as a data server at the Cloud level. By marrying these two capabilities together, Skkynet can effectively and securely offer the Cloud as an extension to any local process.

Cogent’s market has been primarily in industrial automation. With little advertising, Cogent has also acquired a number of financial trading companies as clients, due to the fact that Cogent’s software is both source and content agnostic. High-speed trading and high-speed industrial automation behave very similarly at the level of abstraction that Cogent’s software uses. Recently, Cogent has been working with Japanese companies to penetrate the lucrative embedded device manufacturing world. Japan is one of the largest producers of consumer and business electronics devices, more and more of which contain smallsmall, embedded computers. Cogent has been working with partners in Japan to establish a name and presence in this world, with the aim of having Cogent’s software installed directly on the electronic devices, allowing the manufacturers to instantly make them network accessible.

Revenue: For the year ended October 31, 2024,2025, the Company had revenues of $2,561,745$2,550,951 compared to $2,374,216$2,561,745 of revenues for the year ended October 31, 2023.2024. This reflects ana increasedecrease of $187,529$10,672 from 20242025 over 2023.2024. RevenueThe increasesrevenue candecrease beis attributed to the increaseshift ofin sales infrom theone Cogenttime subsidiary.license payments to subscription payments for software licenses. During the year ended October 31, 2024,2025, the Company’s deferred revenue was $338,382$347,686 compared to a deferred revenue balance of $360,170$338,382 as of October 31, 2023,2024 aan decreaseincrease of $21,788.$9,304. Deferred revenue consists of services billed but not yet provided to the customer and reflects revenues that will be recognized over the next 12 to 39 months.

Operating Expenses: Total operating expenses, excluding depreciation, increased to $2,500,623$2,555,508 in the year ended October 31, 20242025 compared to $2,487,967$2,500,623 for the same period in 2023.2024. This was an increase of $12,656 and as a percentage of revenue G&A decreased to 97.6% in 2024 from 106% in 2023.$53,665. The percentage decreaseincrease of G&A is attributed to higher revenuesalary inand wages along with higher consulting fees during the Cogentyear subsidiaryended inOctober 202431, 2025 over 2023.2024.

Depreciation and Amortization: The Company had depreciation of $2,425$1,931 in the year ended October 31, 20242025 compared to $2,447$2,425 in the same period in 2023.2024. During 2025 the fixed asset were completely depreciated resulting in a lower depreciation amount in 2025 over 2024.

Other Income (Expense): Other income totaled $14,265$16,914 during the year ended October 31, 20242025 compared to other expenseincome of $9,826$14,265 during the same period in 2023.2024. The currency exchangeloss in 20242025 of $11,341$7,172 was comparedcompares to $6,087$11,341 in currency exchangeloss for the same period in 2023.2024. AnOther increaseincome of $37,761, principally interest earned, offset by bad debt expense of $13,675 and currency expense of $7,172 in 2025 compared to other income of $25,461$25,606, overoffset lastby yearcurrency isloss of $11,341 in 2024 giving us the primarynet reason that the Company had other incomeresults in theeach year ended October 31, 2024 verses other expense in the same period in 2023.period.

Income Tax: During the years ended October 31, 20242025 and 20232024 the Company and its subsidiary incurred no income tax. TheTwo subsidiarysubsidiaries filed tax returns as a foreign corporation. During the year ended October 31, 2024,2025, the subsidiary received a tax refund of $26,128$24,925 compared to a refund of $29,897$26,128 for the same period in 2023.2024.

Net Income (Loss): The Company recorded net income of $99,090$35,351 for the year ended October 31, 20242025 compared to net lossincome of $97,872$99,090 in the same period in 2023,2024. a positive variance of $196,962. The increaseSales in sales2025 inwere slightly lower than the Cogentsame subsidiary was sufficient to overcome the increase in expensesperiod in 2024 resultingdue to the conversion to subscription sales. The Company recorded an operating loss of $6,488 in 2025 compared to operating income of $58,697 in 2024. Other income and the tax refund resulted in the net incomeprofit $ 35,351 in 20242025 compared to a net lossprofit of $99,090 in 2023.2024.

Operating Activities: Net cash provided by operating activities during the year ended October 31, 20242025 was $234,638$276,827 compared to net cash provided of $207,822$234,638 for the same period in 2023.2024. This represents a positive change of $26,816.$42,189 from 2024 to 2025 .

As of October 31, 2024,2025, the Company had total assets of $1,549,486$1,831,014 and total liabilities of $659,956$803,299 compared to $1,256,545$1,547,330 and $540,905,$659,956, respectively for the same period in 2023.2024. Stockholders’ equity as of October 31, 20242025 was $889,530$1,027,715 compared to stockholder’s equity of $715,640$899,530 at October 31, 2023,2024, an increase of $173,890.$128,185. Shareholders equity has continued to grow year over year.

The accounting policies and pronouncements are discussed in the financial footnotes of the Company and should be referenced therein. Of the policies, Management considers that of the Company’s significant accounting policies and estimates,estimates; revenue recognition involves a higher degree of judgment or complexity and is believed to be a critical accounting policy (See Note -2 Critical and Significant Accounting Policies)policy.

The Company provides software and related systems and facilities to collect, process, and distribute real-time information over a network. This capability allows the customers to both locally and remotely manage, supervise, and control industrial processes and financial information systems. By using this software and, when requested by a client, our web based assets; our clients and their relevant customers are given the ability and the tools to observe and interact with these processes and services in real-time as they are underway and to give them the power to analyze, alter, stop, or otherwise influence these activities to conform to their plans.

For the three and sixnine monthsmonth periods ended AprilJuly 30,31, 2026, revenue was $606,106$560,504 and $1,155,499$1,716,003 compared to $583,712$482,682 and $1,414,674$1,897,446 for the same period in 2025. Revenue increased for the three months in 2026 by 4%16% and decreased for the sixnine months period ended AprilJuly 30,31, 2026 over the same period in 2025 by 18%.9%. The decrease in the sixnine months revenue in 2026 is attributed to lower sales by Cogent along with the move by the Company from perpetual to subscription licenses. Revenue may vary quarter to quarter due to the number of opportunities that are closed during the quarter.

Operating expense was $875,975$787,461 and $1,642,493$2,429,953 for the three month and sixnine monthsmonth periods ended AprilJuly 30,31, 2026 compared to $780,405$535,085 and $1,411,220$1,946,305 for the same periods in 2025. The increase in operating expenses was impacted by an increase in advertising of $25,273$75,780, compensation increase by $209,028 and general and administrative expenses of $139,113$199,601 during the sixnine months ended AprilJuly 30,31, 2026. General and administrative costsExpenses increased during the sixnine months ended AprilJuly 30,31, 2026 due to additional staff added.and consultants added to support the future growth plan implemented by the Company. This is an investment in the underlying support and systems to generate future revenue.

For the three and sixnine month periods ended AprilJuly 30,31, 2026, the Company reported an operating loss of $269,896$226,957 and $486,993$713,950 compared to operating loss of $194,693$52,403 and operating income of $3,544$48,859 for the same period in 2025. The increase in the operating loss during the sixnine month period ended AprilJuly 30,31, 2026 over the operating income for same period in 2025 is attributable to $259,265$181,443 in lower revenues plus increased expenses of $231,273$483,648 in the sixnine month period ended AprilJuly 30,31, 2026, versus the same period in 2025.

Other income (expense) for the three and sixnine months period ended AprilJuly 30,31, 2026 was otherinterest income of $26,430 and $31,290, respectively and a currency gain of $16,694 and currency loss of $3,415, respectively. This compared to interest income of $11,857 and $29,966, respectively, bad debt expense of $10,337 and income of $4,860, consisting of other income of $13,285 and $24,969$13,631 and a currency loss of $2,948$3,532 and $20,109.$9,131, This compared to other expenses of $31,790 and $964 consisting of other income of $8,357 and $18,109, bad debt expense of $13,474 and a currency loss of $26,673 and $5,599respectively for the same periodthree and nine month periods in 2025. The significant changes in the sixnine monthsmonth period ending AprilJuly 30,31, 2026 over 2025 was the increase in other income from interest earned and the bad debt write off of $13,474 in 20262025 verses nonezero in 2025.2026.

Net loss after income taxes of $109,392$16,840 and $335,901,$352,741, was reported for the three month and sixnine monthsmonth periods ended AprilJuly 30,31, 2026, compared to net loss after income taxes of $227,723$15,445 and net income of $1,340$14,105 for the same periodperiods in 2025. The net loss for the three and nine month periodperiods in 2026 can be attributed to $278,659 of lower revenue and higher expenses as noted above during that period in 2026 versus the same period in 2025. Additionally,The loss during 2026 was offset by tax credits of $329,919 in the operating expenses for the threenine month period ended AprilJuly 30, 2026 was $136,753 more than the same period in 2025.This was offset by a tax refund of $146,232 in the six months period ended April 30,31, 2026.

Net loss to common stockholders was $112,297$19,745 and $341,711$361,456 for the three and sixnine month periods ended AprilJuly 30,31, 2026, compared to net loss of $230,628$18,353 and $4,470$22,820 for the same periods in 2025. Net income to common shareholders includes the expense of dividend for preferred stockholders of $2,905 and $8,715 being accrued for the three and sixnine month periods ended AprilJuly 30,31, 2026 and 2025.

The Company reported comprehensive loss of $131,724$22,418 and $367,251$338,589 for the three and sixnine month periods ended AprilJuly 30,31, 2026 compared to a comprehensive loss of $235,302$17,838 and $13,817$31,652 for the same periods in 2025. The comprehensive income is an adjustment to net gain or loss witheach period due to foreign currency translationchanges adjustments.during the specific period.

At AprilJuly 30,31, 2026, the Company had current assets of $1,937,112$1,896,680 and current liabilities of $933,339,$797,885, resulting in working capital of $1,003,773.$1,098,795. Accumulated deficit, as of AprilJuly 30,31, 2026, was $6,789,287$6,809,032 with total stockholders’ equity of $837,000.$878,089. This compares to current assets of $1,831,014 and current liabilities of $803,299 with working capital of $1,027,715 as of October 31, 2025. Accumulated deficit as of October 31, 2025 was $6,447,576 with shareholders’ equity of $1,027,715.

Net cash used in operating activities for the sixnine month period ended AprilJuly 30,31, 2026, was $280,443$85,328 compared to net cash provided by operating activities of $100,616$203,449 for the same period in 2025. The change in cash used in operating activities for the sixnine month period ended AprilJuly 30,31, 2026 compared to the cash provided by operating activities over the same period in 2025 was due to a combination of decreased revenue $259,265of $181,443 and increased operating expenses of $231,272$483,648 in 2026 compared to 2025 . These two factors caused a variance of $490,537 during the six months period in 2026 compared to the same period in 2025.